| Hello. Today we look at Chile's economy, Haruhiko Kuroda's record tenure at the Bank of Japan and the waning of disinflationary forces globally. With the world set for its fastest economic growth in decades, Chile stands out. Forecasts call for gross domestic product to surge more than 11% this year as the rebound from the early days of the pandemic takes hold, the quickest rate among major economies, as we detail in this story. It'd also be a record for the South American country — no small feat in a nation that sustained one of the greatest economic expansions of modern times in the 1980s and 1990s, after dictator Augusto Pinochet's "Chicago Boys" unleashed a wave of free-market reforms. This time around, the boom is being driven by partially dismantling a key economic pillar from that era — $49 billion has been injected into the economy by allowing early hardship withdrawals from the private pension funds established under Pinochet. Also helping are the government's pandemic-era cash handouts, another move away from the strictest versions of Chicago Boys capitalism. Suddenly, Chileans are flush with cash. Credit and debit card transactions hit a record in August, and sales of durable goods surged 130% in the second quarter. That's stoking concerns about runaway inflation — with the central bank raising interest rates and criticizing proposals for another round of pension withdrawals. But for now, it's go-go times in Santiago. The current estimated delivery date for a diesel version of a popular Chevrolet pickup is October 2022. Andres Balbontin, a manager at a car dealership's parent company, said the boom isn't over. Stimulus cash will keep sales strong through at least next year. "There's tons of money in the streets," he says. — Matthew Malinowski Haruhiko Kuroda is poised to become the Bank of Japan's longest-running governor at the end of this month, testimony to his ability to keep political and market pressure at bay despite the failure of his unprecedented monetary experiment to spark inflation. Candidates vying to replace Yoshihide Suga as prime minister of Japan in the coming weeks will be looking to rely on the BOJ's helmsman just like their predecessors. For the new leader, Kuroda will be an economic and climate policy ally who can stay on message and keep investors calm even when the central bank is changing track behind the scenes. "He has used all the tools in the arsenal, including new ones, to help sustain demand and growth," said Olivier Blanchard, former chief economist at the International Monetary Fund. "This was not quite enough to get inflation back up, but this is the most the BOJ could do." Click here to read the full story. Click on the links to read any of the stories in full: - Inflation warning | Global central banks need to set out clear strategies for coping with inflation risks as the world economy experiences faster-than-expected cost increases amid an uneven recovery from the pandemic, the OECD said.
- Central banks | Sweden steered clear of signaling any tightening of monetary policy, as it remains unconvinced that a recent surge in inflation will last. Indonesia left its key interest rate at a record low. Pakistan surprised with a hike, and Hungary may possibly tighten again today while Paraguay is set to stay on hold.
- Federal Reserve | The Fed meets on Wednesday with Chair Jerome Powell facing the challenge of convincing investors that plans to scale back asset purchases aren't a runway to raising rates. Present at the gathering will be Lael Brainard, who is one of the potential candidates to replace him.
- Risky move | House Democrats will include a suspension of the U.S. debt ceiling in a spending bill needed to keep the government open past the end of this month, a risky move backed by President Joe Biden that assures a potentially damaging showdown with Republicans.
- Sidelined workers | Emergency unemployment benefits in the U.S. expired two weeks ago, but employers who expected an increase in job applications are still largely waiting for them to roll in. In the U.K., job opportunities remain below pre-pandemic levels.
- Fortunes tumble | A global rout in stock markets sparked by concerns over China Evergrande Group hit the world's biggest fortunes Monday, with the richest 500 people losing a combined $135 billion.
- Minority government | Prime Minister Justin Trudeau is poised to win a third term in a snap election but fall short of regaining the parliamentary majority he was seeking.
Inflation pressures may be set to linger because some of the forces which capped prices in the past decades are waning, according to Michael Pearce of Capital Economics. Among the disinflationary headwinds that had restrained prices: - Ongoing technological progress
- Globalization
- Weakening unions
- Central banks around the world committed to keeping inflation low
As Joe Weisenthal explains in the Odd Lots blog, Pearce argues that some, or all, of these trends may be poised to reverse going forward. Goal-oriented... Read more reactions on Twitter - Click here for more economic stories
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